PE/VC investments in Q3 almost half compared to previous year quarter: Report

The decline has been attributed to a sharp fall in e-commerce investing witnessed across deal stages - $245 mn was invested in Q3 against $2.1 bn in the previous year's quarter.ET Online | October 12, 2016, 16:00 IST

NEW DELHI: Total Private Equity/Venture Capital (PE/VC) investments witnessed a 49% decline in value terms at $3.04 billion compared to $6 billion in the same quarter last year. The decline has been attributed to a sharp fall in e-commerce investing witnessed across deal stages - $245 million was invested in Q3 against $2.1 billion in the previous year's quarter.

"Though the third quarter has recorded the lowest investments in the last eight quarters, the deal street has been reasonably active," says Partner and Leader for PE, EY, Mayank Rastogi. "Some large deals are expected to close in the fourth quarter which can make up for some of the lost numbers," he added.

Big-deal activity also slowed down considerably, further contributing to the decline in the overall investment value. From a sector perspective also, most recorded a decline in both value and volume. E-commerce - which was the largest sector last year - witnessed 88% decline in value and a 67% decline in volume, conceding its top spot to real estate.

"In general, investments were expected to go down as e-commerce investing had cooled down," says Rastogi. "However, improving deal activity in sectors like real estate, infrastructure and industrials has been encouraging," he says.

Rastogi also feels that improved status of exits offers a big silver lining for the industry. Exits increased by 64% in value terms for the same period at $1.94 billion as compared to $1.18 billion in the previous year due to large strategic deals. "This trend bodes well for the long term sustainability of the PE industry in India," he concludes.